may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Dakota County HRA,
Filed May 4, 1999
Dissenting, Foley, Judge[*]
Dakota County District Court
File No. CX9814757
Robert A. Alsop, John M. LeFevre, Jr., Joe E. Yang, Kennedy & Graven, Chtd., 470 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402 (for respondent)
David P. Simmons, Michael Hagedorn, Southern Minnesota Regional Legal Services, Inc., 16174 Main Avenue, Prior Lake, MN 55372 (for appellant)
Considered and decided by Peterson, Presiding Judge, Foley, Judge, and Holtan, Judge.[**]
In this appeal from an unlawful detainer judgment granting respondent-landlord restitution of leased premises, appellant-tenant challenges the district court's conclusion that the tenant's agreement to vacate the leased premises on a certain date was a valid and enforceable contract. We affirm.
In January 1995, appellant Robin Blackwell leased a duplex unit from respondent Dakota County Housing and Redevelopment Authority (HRA). The lease provided that the duplex unit was for Blackwell and her four children to reside in and prohibited any additional adults from residing there without the prior written approval of the HRA.
In May 1998, Audra Quandt, a property manager for the HRA, received a request from Multihousing Credit Control for a reference for Theresa and Debra Jackson. The Jacksons had listed Blackwell as their landlord and her duplex as their current address on a rental application. Blackwell denies that the Jacksons lived with her and that she was involved in completing their rental application. Blackwell admits giving the Jacksons permission to use her name as a reference but claims that she did not know they were going to list her as their landlord and that she would not have given them permission to do so.
On June 22, 1998, Quandt sent Blackwell a letter stating that her lease would be terminated effective July 31, 1998, because the Jacksons were living with her in violation of the lease agreement. Pursuant to federal public housing regulations, Blackwell requested an informal grievance hearing. Following the informal hearing, a Dakota County hearing officer issued a summary and disposition conclusion stating:
I have decided that the HRA's letter of June 22, 1998, requiring that Ms. Blackwell vacate her unit by no later than noon on July 31, 1998, be upheld. That termination notice lists the ground under which the HRA has authority to take this action under the terms of the lease. Ms. Blackwell's testimony did not offer any evidence to the contrary; depending upon which scenario is true, she either has let Theresa Jackson and Debra Jackson live with her without authorization, etc., in violation of the lease, or else she has been a party to fraudulent statements to another landlord, and has fraudulently allowed her name to be listed as the owner and landlord of her public housing rental unit. Fraudulent activity of any kind against the HRA is considered grounds for termination.
The notice also informed Blackwell that she could request a formal grievance hearing regarding the disposition by writing to the HRA office within ten days after receiving the letter. Blackwell did not request a formal grievance hearing. Sometime between July 7, 1998, and July 20, 1998, Blackwell telephoned Quandt and requested a 30-day extension of the eviction date. Quandt agreed to a 15-day extension and sent Blackwell a letter stating, "This letter is to confirm our agreement that, at your request, your eviction date of July 31, 1998 has been extended to August 15, 1998."
Blackwell subsequently contacted an attorney. On July 31, 1998, she sent Quandt a letter stating:
I am withdrawing my request to move on Aug. 15th 1998 because I am appealing your decision. I have spoken to legal aid and I wish to have this matter taken up in court.
Blackwell did not move out of the duplex and, on August 20, 1998, the HRA brought this unlawful detainer action against her. The complaint alleged that the HRA was entitled to restitution of the premises because Blackwell had either (1) allowed unauthorized adults to live in her duplex without the HRA's consent or (2) knowingly participated in an attempt to fraudulently deceive a third-party landlord by allowing the Jacksons to list her as their landlord and her address as their residence. The complaint also alleged that the HRA was entitled to restitution of the premises because Blackwell breached her agreement to vacate the duplex by August 15, 1998.
Following a court trial, the district court found:
6. That [Blackwell] voluntarily decided that she would not demand within the 10 working days [after receiving the summary and disposition conclusion following the informal hearing] a formal grievance hearing, and in lieu thereof, entered into a separate and independent oral agreement on 7/20/98 with HRA wherein for valuable consideration given, she agreed to vacate the property on or about August 15, 1998.
7. The consideration set forth for the above paragraph is that [Dakota County HRA] agreed to defer its right to file an unlawful detainer action or to in any other way force [Blackwell] to vacate the property on or before August 15, 1998, and the benefit to [Blackwell] is clear, that [Blackwell] was able to remain on the property for an additional two-week period. However, on or about July 31, 1998, * * * [Blackwell] unilaterally withdrew from the agreement set forth herein and indicated that she would not move on August 15, 1998. There was no consideration for this proposed amendment or change to the contract of the parties. However, it is clear that the parties, both [Dakota County HRA] and [Blackwell], retained their rights to have an in-court hearing pursuant to the unlawful detainer process under Minn. Stat. 566 and that that right was not abrogated by either party.
9. That this Court specifically finds that [Blackwell] did not violate Section IV(A) of the lease dated 1/10/95 by having or permitting accommodation to boarders or lodgers.
10. This Court specifically finds that [Blackwell] did not actively participate in any fraudulent acts which would be a basis for termination of the lease of 1/10/95. This does not mean the Court believes that [Blackwell] did not participate or assist either Theresa Jackson or Debra Jackson in filling out a residential rental application for Burgundy Ridge or that such application was, in fact, fraudulent in nature, but rather, this Court makes a finding that such an act is not a violation of the lease agreement of January 10, 1995, and as such is not a basis for vacation of the property.
The district court concluded that the HRA was entitled to restitution of the premises because Blackwell had breached her agreement to vacate the duplex by August 15, 1998.
Blackwell argues that, in requesting an extension of the eviction date, she did not give up her right to defend against the alleged lease violations. But, after receiving the decision following the informal hearing, Blackwell decided not to pursue the HRA's formal grievance procedure. That fact and her July 31, 1998, letter to Quandt support the district court's finding that she agreed to vacate the duplex in exchange for an extension of the eviction date.
Consideration is something of value given in return for a performance or promise of performance that is bargained for; consideration is what distinguishes a contract from a gift. A promise to do something that one is already legally obligated to do does not constitute consideration.
Deli v. Hasselmo, 542 N.W.2d 649, 656 (Minn. App. 1996) (citations omitted), review denied (Minn. Apr. 16, 1996).
Based on the district court's findings that Blackwell did not violate her lease, Blackwell argues that the HRA was legally obligated to continue her lease until and beyond August 15, 1998. Therefore, argues Blackwell, in agreeing to allow Blackwell to remain in the duplex until August 15, 1998, the HRA was merely promising to do what it was already legally obligated to do. We disagree.
When the HRA agreed to extend the eviction date, a hearing officer had determined that Blackwell had violated the lease, and Blackwell had elected to not pursue the grievance procedure regarding this determination. Thus, the HRA had a basis for bringing an unlawful detainer action on July 31, 1998, and was not legally obligated to wait until August 15 before bringing the action.
Although "`a wholly baseless or utterly unfounded claim is not consideration,'" "forbearance of a doubtful claim is sufficient to support a contract." Charles v. Hill, 260 N.W.2d 571, 575 (Minn. 1977) (quoting Nybladh v. Peoples State Bank, 247 Minn. 88, 96 n.11, 76 N.W.2d 492, 498 n.11 (1956)). Because the HRA reasonably believed that it had grounds to evict Blackwell, its agreement to extend the eviction date provided consideration for a contract.
Blackwell argues that even if extending an eviction date can be consideration, the two-week extension granted to her was too short to be of any value and, thus, did not constitute consideration.
"Minnesota follows the long-standing contract principle that a court will not examine the adequacy of consideration as long as something of value has passed between the parties." It is, however, necessary to distinguish the adequacy of consideration from the existence of consideration. The issue of whether consideration truly exists is not one of mere formalism; something of value must be given in return for performance or promise of performance.
Brooksbank v. Anderson, 586 N.W.2d 789, 794 (Minn. App. 1998) (quoting C& D Invs. v. Beaudoin, 364 N.W.2d 850, 853 (Minn. App. 1985), review denied (Minn. June 14, 1985)) (citations omitted), review denied (Minn. Jan. 27, 1999).
Presumably, the purpose of extending the eviction date was to give Blackwell more time to find a new residence. Even if we assume that the rental housing market is extremely tight, as Blackwell contends, and that it is difficult to find housing in a short time, the two additional weeks that Blackwell obtained through her agreement did have value. If the eviction date had not been extended, the HRA could have commenced an unlawful detainer action on July 31. Instead, the HRA refrained from doing so, and Blackwell had two additional weeks to look for a new residence without fear of being evicted.
Blackwell argues that, when she made the July 20, 1998, agreement, she did not have the benefit of counsel and mistakenly believed that eviction was inevitable. But because this mistaken belief did not relate to facts as they existed at the time the agreement was made, it cannot form the basis for rescinding a contract. When the parties made their agreement, both knew only that the HRA had evidence that Blackwell had violated her lease and that, if the violation was proved, the HRA could terminate the lease. In concluding that eviction was inevitable, Blackwell was predicting consequences that might result from facts existing when the agreement was made.
A contract is unconscionable if it is "such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other."
In re Estate of Hoffbeck, 415 N.W.2d 447, 449 (Minn. App. 1987) (quoting Hume v. United States, 132 U.S. 406, 411, 10 S. Ct. 134, 136 (1889)), review denied (Minn. Jan. 28, 1988).
By definition, an adhesion contract is drafted unilaterally by a business enterprise and forced upon an unwilling and often unknowing public for services that cannot readily be obtained elsewhere.
Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920, 924 (Minn. 1982).
The HRA had evidence, specifically, the Jacksons' rental application, that Blackwell had adults living with her in violation of her lease. According to Quandt, Blackwell admitted at the informal hearing that the Jacksons would stay with her for a period of time and then stay somewhere else. The record shows that the HRA had warned Blackwell on two previous occasions about the consequences of having unauthorized tenants living in her duplex. Under these circumstances, Blackwell's argument that the July 20, 1998, agreement was unconscionable or a contract of adhesion is not persuasive. Blackwell reasonably could have concluded that the HRA was likely to prevail in an unlawful detainer action and that obtaining an extension of the eviction date was a better option for her than contesting the unlawful detainer. Without the agreement, the unlawful detainer action could have been started two weeks earlier.
"[P]ublic policy requires that freedom of contract remain inviolate except only in cases when the particular contract violates some principle which is of even greater importance to the general public."
Christensen v. Eggen, 577 N.W.2d 221, 225 (Minn. 1998) (citing Rossman v. 740 River Drive, 308 Minn. 134, 136, 241 N.W.2d 91, 92 (1976)). Blackwell argues that the July 20, 1998, agreement is contrary to the policy underlying the federal public housing act. See 42 U.S.C. § 1437 (purpose of public housing act is "to remedy the unsafe and unsanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of lower income"); Thorpe v. Housing Authority, 393 U.S. 268, 281-82, 89 S. Ct. 518, 525-26 (1969) ("one of the specific purposes of the federal housing acts is to provide `a decent home and a suitable living environment for every American family' that lacks the financial means of providing such a home without governmental aid"); Thompson v. Washington, 497 F.2d 626, 633 (D.C. Cir. 1973) (purpose of public housing is to make housing available to low-income families).
Blackwell argues that the agreement extending the eviction date was contrary to public policy because the HRA lacked good cause to terminate her lease. The HRA, however, had evidence that good cause existed to terminate Blackwell's tenancy. In light of the district court's finding that the HRA acted in good faith during the entire proceeding to evict Blackwell, Blackwell's argument that the July 20, 1998, agreement violated public policy is not persuasive. Blackwell's argument ignores the fact that a public housing authority is not required to conduct grievance hearings and prove the existence of grounds to support a lease termination unless the tenant contests the eviction. See 24 C.F.R. § 966.4(l)(3)(C)(iv)(1997) (when public housing authority is required to afford tenant the opportunity for a grievance hearing regarding proposed lease termination, tenancy shall not terminate until the time for the tenant to request a grievance hearing has expired).
Courts consider five factors in determining whether to grant specific performance of a real estate purchase agreement:
(a) the contract must be established by clear, positive, and convincing evidence;
(b) it must have been made for an adequate consideration and upon terms which are otherwise fair and reasonable;
(c) it must have been induced without sharp practice, misrepresentation, or mistake;
(d) its enforcement must not cause unreasonable or disproportionate hardship or loss to the defendants or to third persons; and
(e) it must have been performed in such a manner and by the rendering of services of such a nature or under such circumstances that the beneficiary cannot be properly compensated in damages.
Saliterman v. Bigos, 352 N.W.2d 494, 496 (Minn. App. 1984) (citing Johnson v. Johnson, 272 Minn. 284, 292, 137 N.W.2d 840, 847 (1965)). The HRA does not contend that these factors do not apply to a lease agreement.
The first three factors have already been addressed above. Regarding the fourth and fifth factors, the district court concluded:
[The hardship factor] is the one factor that makes me feel that I should not enforce the contract; however, I am taking the position that if I do not enforce this contract, that I have taken away a tool from HRA and from other prospective tenants wherein agreements are regularly made to extend leases for a variety of purposes knowing full well that at some point in time tenants are going to be either homeless or are going to have undue hardship as a result of Courts' rulings, and clearly there is some hardship to [Blackwell], who probably will be homeless as a result of this Court's ruling.
In weighing the equities, the Court does not feel that the hardship is undue in light of the fact that the agreement was voluntarily made without mistake, without force, without coercion, and it should be honored.
The district court also stated:
[T]his Court must also take into consideration good faith and fairness. It is believed by this Court that [Dakota County HRA] has always acted in good faith. Upon receiving the information in the application to the other apartment complex, [Dakota County HRA] could reasonably have believed that there was an impropriety in violation of the lease. As such, this Court does not feel that [Dakota County HRA has] acted arbitrarily, but rather in good faith. True that this Court has made a finding that indicates that no unauthorized individual lived in the unit, but this is after a full and complete hearing with a variety of witnesses which were not present at the time of the informal hearing.
Blackwell argues that the HRA would not incur any damages if the July 20, 1998, agreement were not enforced because she is continuing to pay rent. But as the district court found, if the agreement were not enforced, the HRA would lose a useful tool in implementing its public housing programs because it would not be able to negotiate with its tenants to pursue a course of action that did not strictly enforce its rights. The district court carefully weighed the factors relevant to determining whether specific performance is appropriate, and its decision to specifically enforce the July 20, 1998, agreement was not an abuse of discretion.
FOLEY, Judge (dissenting)
I respectfully dissent.
The trial court, by its ruling, grants specific performance to respondent Dakota County HRA for restitution of certain premises, which, under an "agreement" from appellant, the trial court itself stated, "and clearly there is some hardship to [appellant] here, who probably will be homeless as a result of this Court's ruling." (Emphasis added.) For the trial court to require appellant to vacate the rented premises and for this court to affirm the trial court, and render appellant homeless, is to ignore equity, its meaning and purpose, and its saving power.
A court of equity will mould its relief so as to determine the rights of all the parties, and it will not allow the pleadings to prevent it from getting at the heart of the controversy and seeing that a right result is reached. In equity the kinds and forms of specific remedies are as unlimited as the powers of such courts to shape relief awarded in accordance with the circumstances of the particular case.
Prince v. Sonnesyn, 222 Minn. 528, 538, 25 N.W.2d 468, 474 (1946).
A brief reference to the facts, as represented in the trial court's findings, will show the unfairness of the ruling requiring appellant now to vacate the premises. Appellant entered into a public housing lease in January 1995 with respondent for the rental of a four-bedroom duplex. Appellant has four children and pays $214 per month. Nonpayment of rent has never been an issue. One of the lease provisions states that there shall be no additional adults residing in the duplex during the term of the lease without prior written approval from respondent.
Theresa and Debra Jackson applied for a landlord reference from respondent contending they were paying rent to appellant. None of the documents obtained by respondent relative to the Jacksons contained appellant's signature, nor did appellant participate in completion of the application on behalf of the Jacksons. Of course, it follows that authorizing the Jacksons to rent from her would have constituted a breach of the lease, justifying termination of the lease and compelling eviction of appellant.
Without investigation or even discussing the matter with appellant, respondent sent her a letter terminating her lease for a violation, i.e. permitting other adults to occupy the unit without authority. An informal grievance hearing was held. Appellant was not represented by counsel at the informal hearing.
On appeal to this court, appellant's counsel summarized appellant's position at the informal hearing. Appellant testified that while she did agree to let Theresa and Debra Jackson use her name as a reference, she did not agree they could use her name as their landlord and her unit as their address. She also testified that the Jacksons were not living in her unit and had she known that the Jacksons were going to use her name as their landlord and her unit as their address, she would never have allowed them to use her as a reference.
The hearing officer ruled against appellant. Appellant did not request a formal grievance hearing, but requested a 30-day extension before moving out. Respondent granted appellant a 15-day extension to August 15, 1998.
Appellant later withdrew her request for an extension after engaging counsel. Respondent then filed an unlawful detainer action alleging that appellant violated her public housing lease by allowing unauthorized residents and, in the alternative, by knowingly participating in fraudulent acts by allowing her name and address to be listed in a manner indicating that she was the owner and landlord of a public housing rental unit. Respondent also asserted in the unlawful detainer action that appellant, by not moving, had breached the "agreement" to extend the eviction date from July 31, 1998 to August 15, 1998.
The trial on the complaint was held on September 11, 1998. To this date, appellant remains in the unit and respondent has not lost any rent or incurred any damages as a result of appellant's continued occupancy.
Critical trial court findings that bear on this case are:
6. That [appellant] voluntarily decided that she would not demand within the 10 working days [after receiving the summary and disposition conclusion following the informal hearing] a formal grievance hearing, and in lieu thereof, entered into a separate and independent oral agreement on 7/20/98 with HRA wherein for valuable consideration given, she agreed to vacate the property on or about August 15, 1998.
7. The consideration set forth for the above paragraph is that [respondent] agreed to defer its right to file an unlawful detainer action or to in any other way force [appellant] to vacate the property on or before August 15, 1998, and the benefit to [appellant] is clear, that [appellant] was able to remain on the property for an additional two-week period. However, on or about July 31, 1998, * * * [appellant] unilaterally withdrew from the agreement set forth herein and indicated that she would not move on August 15, 1998. There was no consideration for this proposed amendment or change to the contract of the parties. However, it is clear that the parties, both [respondent] and [appellant], retained their rights to have an in-court hearing pursuant to the unlawful detainer process under Minn. Stat. 566 and that that right was not abrogated by either party.
9. That this Court specifically finds that [appellant] did not violate Section IV(A) of the lease dated 1/10/95 by having or permitting accommodation to boarders or lodgers.
10. This Court specifically finds that [appellant] did not actively participate in any fraudulent acts which would be a basis for termination of the lease of 1/10/95. This does not mean the Court believes that [appellant] did not participate or assist either Theresa Jackson or Debra Jackson in filling out a residential rental application for Burgundy Ridge or that such application was, in fact, fraudulent in nature, but rather, this Court makes a finding that such an act is not a violation of the lease agreement of January 10, 1995, and as such is not a basis for vacation of the property.
The trial court enforced the "agreement" to vacate, holding that appellant had breached the agreement. To hold that appellant provided consideration to an agreement for an extension to vacate flies in the face of equity--to prevent hardship--particularly should this be so when, at trial, the underlying circumstances leading to the "extension" agreement have utterly failed and evaporated into thin air.
To render appellant homeless is a harsh measure with no reasonable basis for the ruling, other than the agreement to vacate. If respondent had talked to appellant or investigated, this unfortunate circumstance would not have taken place.
A court of equity has the power to adapt its decree to the exigencies of each particular case so as to accomplish justice. It is traditional and characteristic of equity that it possesses the flexibility and expansiveness to invent new remedies or modify old ones to meet the requirements of every case and to satisfy the needs of a progressive social condition.
Beliveau v. Beliveau, 217 Minn. 235, 245, 14 N.W.2d 360, 366 (1944).
Under our appellate rules, this court can correct the injustice, remove the hardship, and permit appellant and her children to continue renting the premises in keeping with the public policy making affordable housing available to the poor. "Courts have broad discretion in fashioning remedies." Wenzel v. Mathies, 542 N.W.2d 634, 643 (Minn. App. 1996), review denied (Minn. Mar. 28, 1996); see Pooley v. Mankato Iron & Metal, Inc., 513 N.W.2d 834, 837-38 (Minn. App. 1994) (courts may fashion equitable remedies to accomplish justice on facts of each case), review denied (Minn. May 17, 1994).
Whether there are other agencies to house the poor is no answer to appellant and her children who have paid their rent, caused no breach of the lease, and seek even-handed justice under the total circumstances of this case. She is entitled to no less.
It is fundamental that "where there is a right, there is a remedy." See Beliveau, 217 Minn. at 245, 14 N.W.2d at 366. The controlling equities as outlined in this dissent are all in appellant's favor. "It is but `obvious justice that mistake by one party and knowledge of the mistake by the other will justify relief as fully as mutual mistake.'" Peterson v. First Nat. Bank of Ceylon, 162 Minn. 369, 379, 203 N.W. 53, 57 (1925).
There are no equities favoring respondent. Respondent seeks to enforce an empty agreement devoid of any valid consideration. "In the absence of a consideration there cannot be a contract." Wm. Weisman Realty Co. v. Cohen, 157 Minn. 161, 165, 195 N.W. 898, 899 (1923). Minnesota courts have long held that "[w]hen there is a lack of consideration, no valid contract is ever formed." Chalmers v. Kanawyer, 544 N.W.2d 795, 798 (Minn. App. 1996) (quoting Franklin v. Carpenter, 309 Minn. 419, 422, 244 N.W.2d 492, 495 (1976)).
This court, by its decree, should apply the saving power of equity to this case and protect this family from the emptiness of being rendered homeless. Public policy of a progressive and compassionate society compels us to apply equity in favor of appellant, and our tradition of fundamental fairness dictates that this court correct an obvious injustice.
I would reverse.
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
[**] Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
 Contrast Minneapolis Pub. Hous. Auth. v. Lor, ___ N.W.2d ___ (Minn. Apr. 8, 1999) (in unlawful detainer action affirming eviction of public housing tenant for criminal activity, court findings and facts in record supported trial court's decision).